Perhaps the most telling sign of Indian e-commerce's growth in the past five years is its making of four of the nine startup unicorns in the country. After Flipkart, Snapdeal, and Paytm declared billion-dollar valuations, ShopClues was the fourth entrant in the club – it announced $1.1 billion in January 2016. The five-year-old company, co-founded by Sandeep Aggarwal, Sanjay Sethi, and Radhika Aggarwal, targets Tier II and III audience with wider selection at lower price points, setting itself apart from the likes of Amazon and Snapdeal.
Although there were rumours, the founders have denied a merging of Shopclues with Flipkart. However, they have set themselves new targets with 10 lakh merchants on their platform, and more importantly, are expecting to be ready for IPO in 2017. “We do plan to go for an initial public offering (IPO). By the end of next year, we will be ready for IPO,” Radhika says.
In a detailed chat YourStory had with Radhika and Sanjay recently, the duo revealed what is happening at ShopClues now. Following is an excerpt of the interview:
Things have not changed a lot for ShopClues since becoming a unicorn, says Radhika. “Unicorn is more a tag than anything else. Nothing has changed overnight. We continue to focus on our positioning in the market. We had a little celebration in the morning. Within half an hour it was back to work,” she smiles. The 1,100-member ShopClues team is spread across offices in Gurgaon, Mumbai, and Bengaluru.
But, surely, being a billion-dollar company brings some change in strategies? When asked about the metrics they would be focussing on, Radhika says: “In the five years that we have been running ShopClues, this is the first time we are asked about metrics. But for us, metrics have not really changed. We continue to focus on our customers, merchants and financial metrics.” She reiterates the importance of new customers' response, as they are focussed on the mass market, and not selling branded products.
About 80 percent of merchants and 70 percent of orders come from Tier II and III cities for ShopClues, which claims to have more than five lakh merchants. It is targeting to push that figure to 10 lakh this year, with two crore registered customers. Following a pure marketplace model, ShopClues has no plans for a business-to-consumer (B2C) arm like Flipkart’s WS Retail, so that its merchants do not compete with internal companies in any form.
Also, ShopClues gets a third of its orders each from desktop, mobile browser, and mobile app. Radhika says, “We target the middle class. The devices used to access our site costs about Rs 8,000-9,000. Memory is less for those phones; rate of uninstalling the app is high. They just go to mobile site to make the purchase.”
Financing the buyer is also on the cards. Radhika says:
You will see a lot of EMI plans soon - we are talking to HDFC, Cash Care etc., for customer protection and financing plans in time for Diwali. Similarly, for the customers, we are working with Cash Care, Bajaj Finserv and ZestMoney. We are also revamping our entire loyalty programme. Besides, we will provide services like installation, service planner, warranty, additional warranty etc., primarily around electronics.
Although, ShopClues has been a big player in its horizontal space for a while now, Radhika says that anybody who gets the customer’s wallet share is going to be competition, even if it is a local store. Average basket size in ShopClues is Rs 800. Although cash-on-delivery is nowhere near decline in India, most marketplaces are actively building on their online payment platforms. ShopClues recently acquired Momoe, which is expected to strengthen its mobile payments, as FreeCharge did for Snapdeal.
Contrary to an earlier comment, Sanjay says that there are no acquisitions planned in data analytics and mobility at the moment. “We recently hired a few data experts and some partners helping us with data and mobility. Earlier, we were more dependent on external parties. But in the last six months our in-house capabilities have been improved critically,” he says.
However, ShopClues has no warehouse at all. Radhika says, “We have half a million merchants on the platform. About 35 percent of our orders are in the same region right now. So the items don’t have to get on an airplane to reach the destination.”
The journey of an entrepreneur never ends. But, looking back, the best moments are often from the initial days. When they started ShopClues, each one of the team members owned a domain – and were the only people in that domain. Radhika ran marketing alone for eight months. She says, “I don’t know how I did it, now we have a team of 140 people running it.”
Are they still hands-on in category management, customer experience etc.? Sanjay says, “We both have been in touch with the pulse of the business. We watch it but we don’t interfere with it.” In fact, both co-founders believe in the strength of the team and choose not to micromanage.
It is hard not to notice Sanjay’s Zen demeanour, while Radhika is positively upbeat while talking about ShopClues. But what do they think of the world around them?
Sanjay, who keenly observes every movement in the industry, believes that startup ecosystem is maturing in India. He says: “I think of Flipkart also as a startup. I like the way they have built an organisation. I also admire Snapdeal’s agility. Ola has done a good job of holding itself firm. The test of Indian startups now is growing up. An article I read recently talked about a ‘cute puppy syndrome’ - the puppies are going to grow up, and then they are not puppies anymore. But your ability to keep them cute while they are growing up is important, and that’s the test of time for all these startups. I hope nobody gives up.”
On the supposed funding slowdown so far this year, Sanjay says: “Currently, online retail is just one percent of the overall retail in India. Even a single-digit percent coming online will bring in more investment, if not from Tiger and SoftBank then from other Indian and foreign investors. That transition is already happening. If Amazon is putting in money, others will follow suit too. Just be patient,” he says.
But Indian startups put together got only $2.1 billion in 1H16, while Amazon brings in $3 billion all by itself. Should Indian startups be more wary? Radhika begs to differ. “It would be threatening if there were 500 million people in India shopping [online] and they increase only at 1-2 percent over the next ten years. But we have 1.3 billion population – only 50 million are shopping online, that number will go up to 200-220 million by 2020. All the money Amazon puts in also increases the size of the industry,” she says.
After all, the war has not been fought and the winners have not been declared.